Lsass.exe Application Error - Cannot Boot Disk

I have an XP machine that while booting, after the Windows XP Logo with the blue bar under it shows, receives a message box titled "lsass.exe - Application Error" with the message "The application failed to initialize properly (0xc00000ld). Click on OK to terminate the application." This occurs twice and then just sits on an empty black screen. It never reaches the login screen. I have tried booting to safe mode and the last good configuration and they both experience the same thing...

BACKGROUND: Got the computer with the problem from brother in law who lives hundreds of miles away. He had fixed it and was selling it. It was clean and in good working order except for the following: No boot disk provided. DVD & CD drives wouldn�t initialize automatically. Had to manually go find what you want to play and work with it til it played. Audio CDs would play. DVD never played dvds. Windows Media Player would not play FLV videos or MPEG4, MP4 videos, only avi. An error would come up saying there were not the correct codecs. By choice, this computer & our home does not have internet access, so I couldn�t go d/l drivers or fixes directly to computer. Using my laptop and a flash drive, I d/l GOM Player and installed it on his computer, and it would say the same thing. So I d/l codec packs using the same method. I ran Trend Micro scans on all files before putting them on the flash drive. They were either clean or cleaned. (It said this was cleaned : Locked successfully Troj_Gen.C33L9) Another something came up and quickly said something was successfully ignored.) This was before there was a problem. Began to install Klite_Codec_Pack_580_Mega. Checked all the boxes so all the codecs could run. It started installing lots, then toward end it got an error message saying it couldn�t register some big long numbers. I assumed it needed the internet to continue. It gave the choices to Abort, Retry, or Ignore (recommended). Each button produced the error message above and when you pushed OK it just looped. My husband restarted the computer thinking it would fix it and it began the problem stated at the beginning....